Jeffrey D. Sadow is an associate professor of political science at Louisiana State University Shreveport. If you're an elected official, political operative or anyone else upset at his views, don't go bothering LSUS or LSU System officials about that because these are his own views solely.
This publishes Sunday through Thursday with the exception of 7 holidays. Also check out his Louisiana Legislature Log especially during legislative sessions (in "Louisiana Politics Blog Roll" below).

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13.5.13

Extra sporting event impact can't justify higher taxes

It no longer may be called the Independence Bowl, but Shreveport’s AdvoCare V100 Bowl keeps on defying
expectations with its continued existence despite a host
of disadvantages. And fortunately an attempt to allow local government-allied
agencies dip into the citizenry’s pockets to keep it going was blocked.

State Rep. Henry
Burns filed legislation
for the upcoming session that would have boosted hotel occupancy taxes as much as 2.5
percent, in addition to the current 4.5 percent tax. HB 179 would have
had the extra proceeds split between the Shreveport-Bossier
Sports Commission, the bowl, and to fund Bossier City facilities. Apparently in the proposed law, Shreveport,
Bossier City, Caddo Parish, and Bossier Parish all would have had to agree to allow
the additional levy in order to bring it up to the maximum new level.

The cash infusion would allow the
bowl to increase its payout from its current $1.1 million in the hopes of
attracting higher-quality competition. It currently is scheduled to pit the
seventh-place team from the Atlantic Coast Conference, an East Coast-based, declining
major conference in football that may not be able to fill that slot annually (because
a team must have no worse than a record of no more losses than wins except
under special circumstances) against the tenth-place team from the Southeastern
Conference, which is much stronger in football but because of the low position
slotted also may not be able to provide an eligible team on a regular basis.

If conferences cannot supply
teams, then the bowl must find them elsewhere – usually smaller, distant
schools which have small travelling fan bases and arouse little local interest.
This is among the worst tie-in arrangements in the present football college
bowl game landscape that an increased payout might improve upon, thereby drawing more
fans.

The Commission would have benefited by
having money available to pay for bids and dangle inducements as part of them,
such as conference basketball tournaments, fishing competitions, and
track-and-field championships. It operates under the Shreveport-Bossier Bureau of
Convention and Tourism, which budgets for and pays the operating expenses. The
Bureau derived the vast bulk of its over $5 million in revenues from a three
percent occupancy tax, had higher revenues than expenditures last
year, and was sitting on over $2 million in unrestricted cash.

Two arguments often get forwarded
to justify this kind of revenue stream. One is that a special event such as a
bowl game brings in touristic expenditures, which presumably creates or
enhances jobs and wealth in the area. The other is that it largely is a tax on non-residents,
who normally have little reason to stay in area hotel rooms. Thus, “free” money
gets created for the area.

Of course, this kind of
analysis is simplistic and conceptually incomplete, if not entirely wrong. On
the basis of last year’s number, using static analysis the new tax would
have collected about $4 million. But that ignores the dynamism of the ripple effect of
higher prices, which will discourage some overnight staying in the area, as
these will be passed along to consumers by hoteliers. In turn, this decreases
revenues for this industry, shrinking margins and costing jobs.

Whether these losses would be
compensated for by any extra business is questionable. For the added tax
mathematically to be worthwhile were governments paying for it, for $4 million
collected from 2.5 percent that would have to create a $160 million boost; keep
in mind the last Super
Bowl played in Houston the city estimated only brought in $129 million.
While most of the tax would have been paid by non-residents, meaning the break-even
figure is much reduced, that figure still might not be reached (keep in mind if
only 10 percent of it is paid by residents that still requires a $16 million
impact across all events) and the cost in fewer jobs and lower income in the
hotel industry well might exceed the benefit of whatever does come additionally
to the area from sporting events.

Making the proposition even more
questionable was the already-large income received by the Bureau and its substantial
reserves. It clearly can boost funds to the bowl and/or the Commission if it so
desired; why make the local population suffer the depressive economic effects of
that higher tax if it can transfer a few hundred thousand dollars a year to entities
deemed worthy directly or indirectly?

No matter who pays for the bulk of them, new taxes are not the answer.
There’s no evidence that the area would experience a net gain from this scheme,
and if the will were there, more resources could get shuttled to these kinds of
events without this. This is a bill that never should have been introduced at all, and the House wisely spiked it at its first opportunity.

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